ISPs 'Exaggerate the Cost of Data'

Barence writes "ISPs are wildly exaggerating the cost of increased internet traffic, according to a new report. Fixed and mobile broadband providers have claimed their costs are 'ballooning' because of the expense of delivering high-bandwidth services such as video-on-demand. However, a new report from Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB. The report labels claims of ballooning costs a 'myth.'"

Carefull

[Trubadidudei]

Note that this research was funded by the content providers (like skype) ISPs were asking to pay extra for the bandwidth their services use. I'm not pointing any fingers, but it's something to think about.

Re:Maybe Plum Consulting should become an ISP?

[tech4]

It's not only infrastructure. Not even starting at wages for workers and other recurring costs, ISP's have to pay each other to buy bandwidth from them. Only the tier 1 ISP's can get away with peering without extra costs.

On top of that, their payment model isn't $0.xx/GB of transfer, it's $xxxx per Gbps of bandwidth. If ISP buys too much bandwidth, it means it will sit there without being used, or it may be used in peak times and be just sitting there the rest ~20 hours of day.

Also, it requires there to be actual connectivity available - for example, my country as a whole has something like 30Gbps in/out. Still they're selling 100Mbps for customers to use. It's perfectly sure that if everyone would use that 100Mbps at once to download content off the country, it would not be enough. However, it works out because home users rarely need that kind of bandwidth 24/7.

If you want dedicated bandwidth that is guaranteed, then buy it. Just be willing to pay over $1000 a month for your 100Mbps line. This isn't new to anyone - it's the same in server hosting world too, but there it's more clearly marked if the bandwidth is shared or dedicated as it matters more and some people actually have real need and are willing to pay up to that $1000 a month for it. With home users, no one would do that.

Re:Maybe Plum Consulting should become an ISP?

[Stalks]

> their payment model isn't $0.xx/GB of transfer, it's $xxxx per Gbps of bandwidth. If ISP buys too much bandwidth, it means it will sit there without being used, or it may be used in peak times and be just sitting there the rest ~20 hours of day.

Actually its a combination of link speed and bandwidth used.

The majority of upstream links are billed based on the 95th percentile. This allows for your upstream to have more bandwidth then you require during average usage, but can handle your peak times without affecting your bill too much.

http://en.wikipedia.org/wiki/Burstable_billing [wikipedia.org]

Re:Maybe Plum Consulting should become an ISP?

[realityimpaired]

The overage charges aren't supposed to make them lots of money, it's supposed to keep heavy bandwidth users in control so that the rest of the network doesn't suffer. Also, it doesn't matter how much it actually costs to the ISPs at that point. Nowhere they say it costs them $2.50/GB, but that's the price they're billing from you if you use over something like 250GB a month, which most people won't. They're free to do so. You're also free to choose your provider. However, don't bitch if there are no providers that sell you at the price you want.

depends on the ISP... Bell Canada, for example, includes 2GB/month usage with their cheapest plan, and charges $2.50/GB for overage. That is obscene, and considering that they're charging you $30/mo for a 2mbit connection, there's no way you're going to convince me it actually costs them that much when I can get a 5mbit w/ 300GB/mo and $0.25/GB overage charge for $32/mo, and if I were willing to pay $37/mo, I could get 5mbit w/ no bandwidth cap at all, both from a different provider that uses the same network, meaning I'd be connected to the same port, with the same copper.

Incomplete Picture

[argontechnologies]

I run a wireless ISP in Texas. The cost of buying upstream bandwidth doesn't change much, it in fact gets cheaper per Mb/s as the pipes get huge. The real cost change is in delivery. The backbone between towers, and especially in the access points all have to be increased to accommodate the additional load. In some instances, the access points cannot technologically accommodate the load yet. The ISP model was designed on a over-subscription basis. In other words, you could have 10:1 users using a give bandwidth. With the advent of video like Netflix, this model is no longer going to be viable. We are seriously looking at having two different account types. One that will allow short video bursting, and one that will allow continuous video feeds. The latter account will cost much more than the former since it is what is driving the costs.

Re:Carefull

[TubeSteak]

Even for ISPs running their own network, such as BT, Davies [CTO of communications provider Timico and a member of the board at the Internet Service Providers' Association] claims the figures of â0.01-0.03 per GB are "rubbish". "It's an order of magnitude greater than that," he claimed.

One order of magnitude.
So.. â0.10-0.30 per GB?

The difference between â0.01 and â0.10 doesn't strike me as "somewhere in the middle."
Not when they're charging â10.00 for a gigabtye.

Hold on

[Dwonis]

Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB

Is that €0.03 or €0.0003 ?